Corruption and Adverse Selection

Leonidas Koutsougeras, Manuel Santos and Fei Xu ()
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Leonidas Koutsougeras: University of Manchester [Manchester]
Fei Xu: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique

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Abstract: It is well known that in the presence of asymmetric information, adverse selection has detrimental effects on possible exchanges. We go a step further, and present a game-theoretic setup in which under such adverse selection effects there are uncertain benefits for bribing unknown players' types (e.g., individuals, committees, or companies). A policy maker may then want to design indirect anti-corruption policies based on triggering failures for bribery attempts. In our stylized framework, we get a complete unraveling of bribes. This result can be extended to more complex environments under fairly mild conditions on players' payoff functions.

Keywords: Corruption; Bribe; Adverse Selection (search for similar items in EconPapers)
Date: 2019-09-01
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03393076
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Related works:
Working Paper: Corruption and Adverse Selection (2022)
Working Paper: Corruption and Adverse Selection (2019)
Working Paper: Corruption and Adverse Selection (2019)
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